1. Texas Real Estate Contracts 4 th Edition © 2015 OnCourse Learning

2. Chapter 2 Mutual Assent—the Offer and Acceptance © 2015 OnCourse Learning

3. The Offer, in General An offer is a proposal to act or perform communicated by one party to another with the intent that the proposal be accepted to form a contract. © 2015 OnCourse Learning

4. Offeree versus Offeror The person proposing the offer is referred to as the offeror. The person to whom the offer is communicated is the offeree. © 2015 OnCourse Learning

5. Communication of the Offer Communication is the act of transmitting information. A communication can be either direct or indirect. © 2015 OnCourse Learning

6. Direct Communication A direct communication is made directly to the intended party. For instance, the offeror in a real estate sales transaction might communicate his or her offer directly to the offeree by telephone. © 2015 OnCourse Learning

7. Indirect Communication An indirect communication is a communication made indirectly to the intended party by way of a third party or third party device. © 2015 OnCourse Learning

8. Imputed Communication Imputed communication is a concept whereby communication to an agent is considered communication to his or her principal. © 2015 OnCourse Learning

9. Requirements and Manner of an Offer The offer must not be subject to any conditions. It must sufficiently identify the real estate with a proper legal description. The offeror must also state the price and any other essential terms. These requirements are met when the offeror uses a standard residential real estate sales contract form. © 2015 OnCourse Learning

10. Presentation of an Offer Once the offer has been communicated to the seller's representative, the seller’s representative should review the offer and indicate the overall situation to the seller. © 2015 OnCourse Learning

11. Sample Calculation of Net Proceeds © 2015 OnCourse Learning

12. Offers Distinguished from Non-Offers There are several types of communications which may appear to be, but are not, offers. – expressions of intention – invitations to offer – inquiries © 2015 OnCourse Learning

13. Expressions of Intention An expression of intent refers to a statement made by a person in which the person seeks to accomplish a specific goal. © 2015 OnCourse Learning

14. Invitations to Offer versus Inquiries An invitation to offer simply invites parties to make offers on a particular piece of property. An inquiry is a question proposed concerning a piece of property with the intent that an answer be forthcoming. © 2015 OnCourse Learning

15. Multiple Offers Multiple offers may be implicated in a situation where the seller receives several offers simultaneously concerning a parcel of real estate. © 2015 OnCourse Learning

16. Subsequent negotiations during pending negotiations If the seller and prospective purchaser are in the midst of negotiations, the seller's agent still owes the seller the duty to present all offers, unless otherwise instructed, until the seller and prospective buyer have agreed in writing on all aspects of the negotiations. © 2015 OnCourse Learning

17. Backup Offers and Contracts A backup offer is a second offer presented during the pendency of a contract. Typically backup offers arise when the property owner has a pending contract for the sale and purchase of the real estate. Addendum for “Backup” Contract form must be used. © 2015 OnCourse Learning

18. Termination of the Offer Revocation by the Offeror Rejection by the Offeree Lapse of Time Destruction of the Subject Matter Death or Insanity of the Offeror Illegality of the Subject Matter © 2015 OnCourse Learning

19. Revocation by the Offeror Revocation refers to the act by the offeror of withdrawing the offer. A revocation of an offer by the offeror is not effective until it is received by the offeree. © 2015 OnCourse Learning

20. Rejection by the Offeree Rejection refers to the refusal by the offeree to accept the terms of the offer. © 2015 OnCourse Learning

21. --Lapse of a specified time In proposing an offer for the purchase or sale of real estate, it is a good idea to put some limitation on the time for acceptance. This forces the offeree to make a decision as to whether or not to accept. It prevents the offeree from sitting on the offer too long in the hope of receiving a higher or better offer. © 2015 OnCourse Learning

22. --Lapse of reasonable time Where no time is specified in the offer, the offer will terminate within a reasonable time. © 2015 OnCourse Learning

23. Destruction of the Subject Matter Destruction of the subject matter refers to the partial or complete loss of the property due to some Act of God or a governmental taking. © 2015 OnCourse Learning

24. Death or Insanity of the Offeror An offer also can be terminated before acceptance by the subsequent death or insanity of the offeror. © 2015 OnCourse Learning

25. Illegality of the Subject Matter Illegality refers to that which is contrary to the principles of law, morals, or public policy. © 2015 OnCourse Learning

26. The Acceptance, in General Acceptance is an action taken by the offeree upon receipt of the offer that manifests his or her agreement to the terms of the offer by the means indicated in the offer. © 2015 OnCourse Learning

27. Who May Accept the Offer The only person who may accept an offer is the party to whom the offer is communicated. © 2015 OnCourse Learning

28. Validity of Acceptance In order for the acceptance of an offer to be valid, it must be identical to the offer. © 2015 OnCourse Learning

29. Manner of Acceptance The preferred manner of acceptance by an offeree is an acceptance in writing. © 2015 OnCourse Learning

30. Silence The general rule is that silence does not constitute acceptance. However, where an offeree takes benefits indicated in the offer without verbal or written acceptance, the silence may be sufficient to constitute an acceptance. © 2015 OnCourse Learning

31. Pre-Contractual Liability Pre-contractual liability is liability that arises due to failed negotiations between the parties before a contract is formed. © 2015 OnCourse Learning

32. Restitution Restitution is an equitable remedy under which an injured party is restored to his or her original position before the injury occurred and placed in the position that he or she would have been in had the breach not occurred. © 2015 OnCourse Learning

33. Promissory Estoppel Promissory estoppel is a doctrine that arises when a party to a contract relies on a promise of another party to the contract, and injustice would result if the injured party was not able to recover. © 2015 OnCourse Learning

34. Good Faith Good faith refers to an honest intention to contract and the absence of the intent to defraud. © 2015 OnCourse Learning